FIRE: Choose Your Own Adventure #380

I'm excited for this episode, buddy. There's different routes to success, just like if you're playing a game like Settlers of Catan, right, I mean, there's different ways that you can win, and so you don't always have to take take the same routes. And I think sometimes when we talk about fire, the fire movement, it seems like there's one prescribed way to get there, but we say no, there's actually a lot

of different paths. And so we're going to kind of cover that in this episode for folks that are interested in reaching financial independence, in doing so before they get super wrinkly, uh, we'd say this episode for you. Speaking of Gatan, I was always a fan of building multiple cities on a high rolling commodity, like say sheep and then getting that two to one port trading directly to the bank. That way you don't have to trade with

any of your fellow players. That was always a fun That was a good move for you to because you annoyed all of your fellow players so much they didn't want to trade with you. So I had been known to do that. It's been years since we've played Settlers like we would always play some of the other games like king Domino or Carcassone. Acquire is like a new real estate one that I feel like that. You know that we've been playing a decent bit, but Settlers, like

the o G haven't touched it in years. Been a minute, spent a minute, Gotta pull it out, dusted off. Okay, speaking of Acquire, this makes me think about real estate and Matt. Before we start talking about fire, I want to let you know, uh and our listeners know. So, our family were having some renovations done to our house. We're getting basically when when we bought this house, it's a nineteen thirties house. It needed a ton of work,

but we decided to live in it. We're not the back for a few years, um and now our family wants to take over the whole house, and so we need to renovate it away from being a duplex into a single family home. And I got that second kitchen that was kind of pointless. No need for two kitchens really right in our family. And yeah, there's a lot of work that needs to be done. So we're moving out and we moved into this like super tiny house, like square feet so kind of interesting, a lot smaller

than what you're used to write. I was starting to a friend who used to live in New York and he's like, that sounds palatial at least by New York standards, but yeah, for Atlanta standards. To the family five, it's very small. But it's actually it's it's been good for our family in a lot of ways. We've been able to kind of pare down some of our possessions and it's been kind of fun to live in small quarters.

But I met my new neighbor there who's flipping the house next door, and this is his second home that he's he's renovating it and he's going to rent it out. His name's Kyle, and it's so fun to kind of talk to him as he's kind of just getting started it in his real estate investing adventures. He's super excited. He's listening to like the Bigger Pockets podcast every single day because that's a one of one of the better

real estate investing podcasts out there. And yeah, I just wanted to say, like one go Kyle, I'm proud of you, and I'm I hope you kicked butt and um and just to everybody out there, like if you've been wanting to get started investing in real estate, I know, now maybe not the easiest time to buy a house, but you know what, Kyle made it happened. He's he's the

numbers work for the house that he bought. And it's not gonna work in every market, but I just want to let you know, you know, Kyle, is this glimmer of sunshine in like a market of insanity out there that it can be done. You can buy a rental

property where the numbers actually are going to work for you. Yeah, the opportunities still exist, right, I mean, it's not going to be as easy as it was, say ten years ago, but the deals are out there, especially if you're willing to put in the work, uh to find those specific deals, and of course you'll make sure to keep all of us updated as to how your home renovation is going. Maybe after living in that that new tiny more uh affordable. I don't want to call it a cheap house because

it's actually really nice. I've I've checked it out. Maybe what if you end up deciding to live there full time and uh, you guys start downsizing, you're gonna take the minimalist approach. Down with the downsizing. I am down with the downsizing, But we would miss our house. Yeah, and in our our location. We were already we have all about the location. We haven't been in the house very long. It's just you know, a mile and a

half away. But still that's that's a long way away from my people, so my neighbors that I love, my you know, friends right down the street. I missed that already. Instead of a two minute bike commute now to the studio here, now you have like a ten minute bike commute or something like that. But it's actually kind of nice. I get more work out of it. That's that's actually

one of the benefits. School has been out, man, and I actually haven't been biking at all, and I got up my game when it comes to my physical fitness, but kind of counter to that, let's introduce the beer that we're gonna enjoy this episode. This is a beer by Microphone Brewing, and this one it's called Smells Like Being Spirit and it's a double maple stouts. Looking forward to enjoying this one and sharing our thoughts on it at the end of the episode. Sounds good. But for now,

let's get to the subject at hand. We're talking about fire, financial independence, retire early, choose your Own Adventure, and basically, matt Um, we were talking about kind of what how we wanted to approach this episode. I was thinking about those Choose your Own Adventure books. Um, I'm you know, we all read them as kids. I always enjoyed them.

I think Actually Netflix recently did a similar style television show with bear Grills or he's like out in the wild and he's like, do you want me to eat the snake or punch it? Uh? Seriously, yeah, I know. I mean they never watched it, but that's what Black Mirror did that with like one of their finales, Bander Snatch, you know, where they had multiple endings or four or five different endings that you could choose, uh, to kind of incorporate some of that nostalgia from the from the

nineties and those Choose your Own Adventure books. So, yeah, choose your own adventure still still hot, still happening in these days. But I always remember I kind of keeping my finger on the original page as I made the next choice, just in case I was like, oh, man, I don't like that. I'm going back and I'm gonna opt for the other choice in case you get bitten

by a snake. Exactly exactly. And since Independence Day was this past weekend, it's really only fitting to keep talking about the pursuit of financial independence today on the show, right, And yeah, just like those Choose your Own Adventure books, I think the path that people take towards to achieve financial independence, it can look really different from person to person. There are lots of different types of financial independence and then also to lots of different tactics you can take

to get there. Yeah, this past Monday's episode, that's what we talked about with Rachel Richards. We actually talked through some of the different ways to generate passive income, uh that would eventually hopefully lead you to financial independence. But yeah, the pursuit a financial independence doesn't have to look a

specific way. Uh. So, yeah, we wanted to talk today about the different styles, the different flavors of being financially independent and sometimes, you know, just discovering just even the range of options can be a major encouragement as we seek to find a lifestyle that works for our own personal lives. You know, saving up five million dollars so that you can kick back in your in your later years might not be your thing. It may not even be possible. Right, Yeah, that's a tall task, and that's

okay because fire can look different for everyone. And so we'll talk about the different types of fire and then some of the most important tactics to consider on your path to achieving fire. Uh. There is no right or wrong answer. There's just different approaches to financial independence, for sure. And so yeah, we I mentioned that FIRE stands for

financial independence retire early. That acronym has become maybe fraught with some baggage, although it has been the gateway for a lot of young people to realize that they have more power over their financial lives than they thought. I feel like as that acronym has caught on, it's been kind of a whipping horse for the media at many turns to kind of disparage the movement and people that

are seeking to retire early. But at the same time, it's helped a lot of people conceptualize the idea that they can reach financial independence before they do hit traditional retirement years. Um. It's empowered a lot of hard working folks to realize that the stock American belief that working forty plus hours so week for forty plus years then retiring to Florida isn't the path that they have to take. And yeah, we think that's a good thing. Um. It's

simply put fire. Getting to that point where you're financially independent usually means having twenty five times your annual expenses saved up, although one of the things we covered on Monday's episode with Rachel is that that's not always how it looks. Sometimes it can look like your monthly spending being covered by passive income through something like real estate too. That's right. Yeah, So we're gonna talk about fire in depth today, but we don't necessarily endorse everything you know

that the movement is all about. We talked about the pros and the cons of fire back in episode to twenty one, so you can check that one out if you haven't listened to it. Uh, And there really are a lot of good things that the movement has done, including starting some important conversations in the public space. As big media has covered fire, I feel like it has open the eyes of a lot of folks who haven't considered it before. But that doesn't mean that fire is

for everyone, right. I could even see it being harmful to some individuals. Right, So, say you jump too heavily into the fire world, you might be tempted into grinding too hard for the next fifteen years to achieve this specific monetary goal, and then reaching that goal may not

be as satisfying as you think it will be. And so we're you know, we're bigger fans of the f I part, the financial independent part, and we're all about making intentional choices to make sure that we get there, but not necessarily pursuing it with all the gusto that you can muster. We feel that can that can lead to burnout. A lot of times. I think folks think that when they achieve fire, once they're financially independent, that all the problems are going to go away. But that's

definitely not the case. I think those folks are going to be in for a rude awakening, Yeah, for sure. And Matt, let's talk maybe about the history of the Fire movement too, because that's helpful, I think as as we kind of discuss it at length today. In the history of Fire really predates the acronym. I don't know exactly when the Fire acronym started. It feels like, I don't know, maybe sometime ten years ago, eleven years ago,

that's my that's my guess. But really there were people talking about this concept um and people living a life that reflected this concept far before that acronym came about. Vicky Robin. She was the co author of the best selling book Your Money or Your Life, and she and her co author really helped popularize the idea of financial

independence in the nineteen nineties. But these principles have been around even before that, and it really it really starts with creating a big gap between what you earn and what you spend. And um, the bigger the gap, you know, the quicker you're gonna be able to reach that place in your life where your money is working harder for

you than you have to work for it. And Yeah, the cool thing is that those fundamental principles haven't changed, but the way that those ideas get communicated really has. And so yeah, that, like we said, has helped this movement out in a big way. It's become a really powerful communication tool to help spread a message that can

be pretty empowering. That is true. But you know, in recent years, the actual fire acronym has been popularized, you know, quite a bit by single males who work in higher paying like software and technology jobs, um, and you know, sort of like you mentioned earlier, like the movement has

caught some flak for that. It has become a whipping horse with media, and in some ways, we feel that this was kind of a bit of a stereotype because on our show, many of the guests that we've had that are in the Fire movement they don't fit that bill. They're not you know, single males who were working in

you know, high paying jobs. Although we definitely have had some of those guys on, We've also had folks on the show like Jillian John's Rude Julian and Kirsten from from rich and regular here in Atlanta, Liz Thames, Tanya Hester. They have all shown that there is more diversity than than some people think inside of the actual Fire movement. Yeah, and I think the Fire movement has grown to really encompass a whole lot of folks that look a lot

different than the stereotypes that we see portrayed. And although like probably one of the most popular figures in the movement, it probably does fit that stereotype to a large degree. And that's Mr money Mustache, right, who was a software engineer but before he quit, right, And so yeah, he's he's like probably the best known writer um in that spear. Uh.

And he is a really good writer. So there's a reason why, right, he has well it in creative posts that help people think through what it looks like to save more money by changing their lifestyle. And Matt he takes us really like brash approach in in how he writes and h yeah, he's referred to the typical middle class lifestyle as and I quote an exploding volcano of wastefulness.

It talks about folks driving around in their clown cars, you know, just like the different vehicles that we drive that are completely unnecessary and and we you know, we agreed to that to a certain extent. That's a part of why we love biking. So much, but like when you read his post, you feel compelled to change some of the things that you're doing because of the stark

contrast anything that it hangs. He does a good job with that, and so yeah, he makes fire, financial independence and retiring early feel like something you don't have to grind to achieve, but more like away folks should be living anyway instead living less wastefully and just living more intentionally. Yeah, he makes it make intuitive sense where it feels like it's something that you should naturally be doing anyway. And the thing is too folks like Mr money Mustash and

Vicky Robbin. For them, the fire concept goes beyond just the dollars in the set. You know, they're all about decreasing our environmental footprint as well. You know, connecting your spending and your money choices to bigger ideals can be really helpful. But that's just one of the additional benefits of fire right. It's not necessarily a requirement, because again, fire can look different for everyone. You can choose your

own adventure. And so we're actually gonna talk more about the different types of fire, financial independence, retire early, some of the different flavors out there that you might want to subscribe to. And we'll get to that right after this break. All we're back, we're talking about fire and how there's a bunch of different ways that you can

get to that point. I think it's helpful for folks to know that there's not just a one size fits all, uh, when you're looking to save up enough money that you

don't have to work anymore. So, Matt, But before we get to maybe some of those different types of models that people can follow in order to achieve that, let's maybe talk about the general concept of retire it for just a second, because you know, just like we talked about the fire movement, the fire acronym being relatively new, well, the general concept of retirement is pretty new in and of itself. For most of human history, working your whole life was the thing, like you didn't really have. We

didn't have, you know, social security, but choice, we didn't. Yeah, it's what you had to do, like working working to land until you dropped dead while working the land. And I'm glad that that's not the way life is anymore, right, um, And So retirement being a thing is a good thing, but it's also important to keep that in mind. As we discussed this that the modern concept of retirement is relatively new. Uh, it's not something that our ancestors four

hundreds of years have been participating participating in. It's not like, you know, you're great great, great, great great great Grandpa in the sixteen hundreds moved Florida and walked on the beach every day because searching for sharks, which is let our kids do know, wake at at the beach. Ye back then it was the thing. Yeah, back then they're just trying to avoid the bubonic plague, right, which actually that's not too different I guess from our recent the

recent year that we've had. Uh. And you know, the concept of fire, it does have its merits, right, the fact that you don't have to work when you save up enough money is great. But at the same time, some folks in the fire movement emphasize the negativity of work, right. It's you know, it's certainly not that everyone get gets pumped to wake up and to go and do their job every day, but focusing on early retirement makes work seem like a drag meant to be ditched at the

earliest possible moment. And you know, we're not really down with that, and that's another reason why we're just more focused on the financial independence side of the equation less

on the retire early side of things. Um. I think, I mean, I think we both believe that in order to live a fulfilling life that it involves service, whether or not you're getting paid for it, whether or not you're being compensated at a very high amount, or if you're just kind of receiving just kind of a you know, may we have a more minimum wage for for the service that you're doing, but service eagles work, right, And so for that reason, we're not trying to escape work.

But we do want folks to have more options as they go through life. And that's what we're talking about today. And if someone came up to me and they said, all right, if I take this job and I work for the next twelve years really hard, I can reach financial independence, but I'll hate most every minute of working at this job, I would say, don't do it. I would rather you take much much longer to achieve financial independence than pursuing something for the next decade plus that

you don't enjoy in the least. Um, just in order to get there more quickly. Assuming that the alternative is a job that you love, right, So twelve years of basically life that you hate. But that's the thing, there's

that that's never the only option. It is like between two jobs that you hate, right, right, you can always go find something that you love to pay is less or that you enjoy and granted, like like you said, even people that enjoy their jobs, they're not going to be thrilled to go into the office every day or you know, even even coming to the microphone. Sometimes I'm like, maybe I'm not in the best mood to record a podcast that day, but I get through it. You know, Um,

maybe you're mad at me, anything to share today. We're good. We're good, good. But yeah, that's that's one of those things where I think sometimes the fire movement can turn work into such a villain that it can really affect the mindset of some of the people working to achieve fire, and I think that leads to the downfall of some of those people. Um and maybe like the burnout factor that some of the people trying to go down the

fire path tend to experience. That's right, Yeah, so the path to fire can look different based on your particular circumstances, your specific goals, and you know, unsurprisingly, the media tends to take extreme positions. Uh, And I feel like they oftentimes either make fire seem like like it's only for incredibly high earning tech bros out there, or just for folks who you know, want to live a meager existence of like eggs and beans, or like like just the

cheapest what's like, what its rising? Beans? Why say eggs, because like, eggs are really cheap. Eggs are super affordable, good for you, they're cheap, large part of our diet here in our household, but just essentially subsisting on like fifteen thousand dollars a year, right, that's the only way you can achieve it is if you either make bouckoos of dollars or you live on next to nothing exactly. And that's just not the case. That dichotomy is not

quite right. Yeah. Yeah, there's more diversity all on the fire spectrum, and chances are that there's going to be a version or a flavor that is going to appeal to you. So let's get it off me, let's talk about some of the different types of fire. Let's do it all right, so we just you know, you mentioned the beans and rices lifestyle living on k there are

some people who that style of fire. It fits their needs, it fits like their desires in life, and they're like, I just want to be financially independent and I don't mind living an incredible frugal lifestyle. And for those folks who lean in that direction, they're going to be into what's called lean fire. And so yeah, this is for the folks who just can't wait to quit work and

don't mind having an incredibly small residual income. And yeah, these folks are basically looking to cover their basic needs like food, transportation when they need it and trying to keep those costs to a minimum and uh, you know, a really small rent or mortgage. Some of these folks, you know, they might even move to different lower cost of living areas of the country or even the world

in order to achieve this. Right, So let's say you know you're saving like Panama or Thailand, right, Yeah, Portugal is another destination where some people are moving, which sounds like fun Like that's uh, I mean, I mean we're actually not planning to talk about this, but like the nomadic fire lifestyle or you know, like that's another sort of shand or another flavor that I kind of feel

like lends itself to lean fire as well. Yeah, yeah, yeah, because if you have your money saved up in US dollars, but your dollar goes three times as far in another you know, lower cost of living area, then it makes sense, right you can live that lean fire lifestyle on your money if you're willing to make that move, right, right, So yeah, the upside is that you're able to achieve financial independence really quickly, but the downside is that you're

gonna have to make some serious sacrifices if you go in that direction. So, Matt, I don't know about you, but the lean fire approach doesn't really have any appeal to me, but I can see how some people might be interested in that. Yeah. Yeah, the pros are that you don't have to work anymore, but she also can do much of anything else. Like I feel like this really does lend itself to kind of like the more

minimalist approach. Like, for instance, if you ended up staying in the house that y'all are in instead of renting it out, which is your plan, Uh, you could be lean fire probably today, right, because it's it's a really, really affordable house. But yeah, that doesn't lend itself to the lifestyle that you're looking for. And I think it's tougher too with kids, right, Like, it's hard enough maybe to get a partner on board with cutting Hey we're

gonna cut back our lifestyle completely. What do you think about that? This is what our lives are gonna look like, This is how little we're gonna travel, things like that. But it's even more difficult, I think with kids, and not because I'm not going to subscribe to the you know, the reports that you see that kids cost like, you know, five dollars, but you know by the time that they

leave your house at tea right there. Yeah, but they do have a tougher time understanding the same goals that you as an adult have, right I mean, and it's understandable like kids or kids they don't think like adults, and so I think at times it might be difficult to get kids on board. So that's something to keep

in mind. I think it lends itself to the single software engineer who might be down with like living in a van down by the river kind of thing, but a little bit tougher with maybe a larger family or if you have other goals in life that you're looking to pursue. Yeah, that doesn't mean that you can't live frugally as a family, But lean fire is like cutting to the bone, and that's a little too much for

most people to stomach, that's right. Yeah, And so next let's get to coast fire, which can be ideal for some of the younger folks in the movement, especially that this fire route is all about saving up huge chunks of money in your early working years and then not having to prioritize saving and investing after that. Right, So

essentially you're front loading the sacrifice. So let's say that you max out your retirement accounts, you're four one K your roth ira A say, for ten years running through your twenties into your early thirties, you'll have sucked away over two or fifty thousand dollars, right, not to mention the growth that you'll will have already seen on those dollars that you have invested early on. But at this point,

your index fund portfolio is almost guaranteed. I mean it is guaranteed to turn into a good bit more than one million dollars. If it's not, we've encountered really termulent troubling, you know at times when we're all screwed. Yeah. Yeah, by the time you hit retirement age, right, and so once you have that done, you can now stop contributing

to retirement accounts altogether. Uh, and you can look to do something like increasing your spending levels, finding ways to maximize your enjoyment out of life essentially, you know, and especially as you maybe you start to have kids stuff like that, and let's say your thirties, it affords you a little more breathing room because you can soak up more of that income into your spending now because you did such a good job during those first ten years

of your investing lifetime and you built up such a large nest egg that you don't have to keep funding it because you don't need five million dollars in retirement. You just need one million something like that, right. And the idea too. So this is called coast fire. It's not to be confused with like. This doesn't mean that you're living like on the coast, like the Amulfi coast, right. This means that you've worked hard. Uh. It's like imagine

that you're flooring it. You're getting close to this hill, a big downhill, and then you start going down downhill, and then you can let your foot off the gas a little bit and you get the coast all the way down. That's the kind of coast that we're talking about here. Yeah, I feel like to the good thing.

The thing I like about that route and that strategy to achieving fire is that can completely change how you view work, because if you're no longer having to save towards retirement, you know, once you've kind of done that hard work, you can switch jobs or careers if you don't find your current line of work fulfilling, or if

it's become too stressful. Maybe, of course, you still have expenses to pay for in the meantime, but if you no longer have a boatload of debt and you're not worried about how you're gonna survive, you know, in your elderly years, you can then have the freedom to pursue things that bring you joy instead of doing something that

you don't love. And you and I were were all about that, teaching things that you don't love, getting that stuff out of your life, even if it produces a giant monetary return um for most people, most of the time,

it's not worth it. Yeah, what's crazy about Coast fire is I think for a lot of folks, I think they if they crunch the numbers, they might realize that they have kind of already achieved Coast fire, right, And so I actually crunched them are specific numbers because I wanted to see what it took for someone to hit one million dollars by the time they hit sixty five.

And all that means is that you need to have ninety four thousand dollars invested by the time you're thirty years old, and so thousand that's I mean, that's pretty attainable. I mean, it's easy, but it's attainable. And I don't want you exactly, I don't want to downplay how hard it is to get together close to a hundred thousand dollars.

But if you have that money invested and you're earning about seven percent every year through the power of compounding interest, you're going to hit over a million dollars by the time you hit sixty five years old. And granted, we're talking about fire, which is retire early, and sixty five is obviously more of a traditional view of retirement. But I guess I wanted to point that out because I think a lot of folks might realize, oh wow, like

I am on the spectrum to a certain extent. And if you are at that point, just like you said, Dull, it gives you the freedom to start making some choices in life that may not be the best choices when it comes to your money as far as the dollar amount, but it might be more fulfilling work. It makes me think about what we're doing right now. I mean this podcast.

You and I have gone into creating this show. It's something that we have a lot of passion about, something that we're excited to spread the good news of financial independence, of people doing smart things with their money in order

for them to have more options down the road. And I believe you and I had a degree of confidence to step into creating the show full time because, Yeah, we look back at the ten plus years of our lives where we had done smarter things with our money, where we were primarily focused on the dollar amount, and if we wanted to, we could, You and I could could both stop contributing to our retirement and investing that money and just you know, say we were only making

enough to subsist and exist and you know, pay the bills today. By the time we hit sixty five, you and I both are going to be okay. So I mean, technically speaking, you and I are both in the coast fire camp. That's the stage of life that that we're in. Yeah, for me, Matt, what it comes down to saving the investing well gives you options, and uh, coast fires kind of all about those options, like I'm gonna work really hard in the beginning and then I'm gonna be able

to do what I want. And often times it does mean it gives you those options to not necessarily amass this huge nest egg of money for your future self, because who really needs five million dollars with retirement. I guess some people. Nobody really needs it, but some people want it. Some people want it, that's what they're going for. And we say, we don't really, we don't really need

that much money. Um, we'd rather make choices now in our thirties to do work that we love, to get, to enjoy more time with our family, with our kids, really to create the lifestyle that we want. And so yeah, coast Fire I think resonates with both of us a lot more than maybe some of the other types of fire that we'll talk about. Yeah, because it's I mean, again, I don't want to feel like I'm beating a dead horse.

But it's it's not like we're forsaking work altogether. Like we're still working hard, but it's just it's not like a light switch that's either on or off. And I think a lot of times when it comes to retirement or fire, folks, that's how they that's how they approach it, right, It's like it's either on in a working crazy hard and I'm neglecting my health, my relationships, my mental health, just everything that's out there, and then eventually we're gonna

flip it off. I'm no longer gonna work. But you and I, I mean, we're talking about approaching this less as like an on off switch and more like a dimmer switch. It's just like, Okay, you know, we were pretty close us to full capacity, you know, full brightness level, but now let's just kind of dim it down a little bit. You know, We're we're definitely still working, but we also have the ability to prioritize some other things in our life, like relationships and in different things that

we want to pursue. Yeah, I think the dimmer switch is a good concept when when it comes to fire doesn't have to be all or nothing. And so yeah, I think the next you know fire type makes uh it fits into that category. It's called Barista fire, which is more of an attempt to save and invest well with the goal of retiring, but also still needing to work part time and and have that part time work

offer you benefits, particularly healthcare benefits. So Starbucks is obviously known for offering excellent healthcare benefits to employees that work only twenty hours a week. So yeah, the thus the Barista fire exactly. So that Barista fire strategy is this alternative essentially for people who aren't ready to save more than their income, because that's a tall order in order

to retire ridiculously early. That's maybe not what they care about, but they just want the flexibility to be able to work less as they get old, and so yeah, similar to Coast fire, you still have a job much of the time, but you're even less dependent on it, right, So it's it's kind of like partial retirement. It's not get to work just part time and you have those benefits, right, like healthcare obviously would be a huge drain on your

budget if you're retired. Paying for your own health benefits is one of the biggest conundrums in the fire community. And so if you're Barista Fire, you have enough money to pay for your living expenses, but you're saying, I still't want an employer, or one for part time income, and then two for some of these benefits that are kind of crucial to being able to, you know, live

the life I want to live. Yeah. Again, one of the similarities between Barista Fire and Coast Fire is just a high view of work, so it's not something that we're trying to completely escape from. And of course at the other end of the frugality spectrum is fat fire.

If this is your aim, you're gonna need to save up a pretty large nest x that your lifestyle doesn't get cramped in the slightest you might be in that Actually, I do want five million dollars in my retirement account, you know, territory and the kind of life I would have lived. Perhaps you want to include even more spending than you're used to. People going in this direction either work a few years longer to build up those savings, or they they suck away an amazingly high percentage of

their pay in order to to achieve fat fire. Apparently there's an obese fire as well. I've even heard it referred to as morbidly obese fire. And so the acrimonym is MO fire. It's safe to assume folks that can't want to be able to participate in all that life has,

regardless of the cost. So, now that we've covered a few of the different types of financial independence, retire early, a few of the different models that you can choose to kind of look to as you're figuring out how you're going to invest and how you're going to live today while you're also trying to pursue financial independence down the road. Well, let's talk about some of the tactics that it takes to get there, how to achieve financial

independence and retire early. We'll get to our thoughts on that right after this break. We are back and Joel, this is fire Choose your own Adventure episode. And we've talked about the different types of fire, and so now let's discuss how to do it. Uh. And you know, at a very high level, you have to to spend less than you make, like Essentially, that's how you do it. That's the basics. That's not really it's if you're living paycheck to paycheck, if you have no margin in your life,

fire isn't even going to be on your radar. Of course, if you're you know, if you're spending more than you make and you're going further into debt each successive month, then you're going in the opposite direction and you're digging yourself in a hole that will become, at least over time,

harder and harder to climb out of. Yeah. So, Matt, before someone can even decide, well I want to go towards fat fire or I wanna I'm more of a coast fire person, really, they have to think about their savings, right, right. That's like one of the biggest tactics that you have to figure out is how much of your money ken you save, because that's going to determine how quickly you're able to get to that point of finding independence. There

is another overarching principle here. Yeah, so we personally believe that listeners should be shooting for a savings rate of at least fifteen of their income. We'd like to see most of that money invested for the future too. And Mr money Mustache we referred to to him earlier. He's got this great chart on his website that puts some concrete numbers to your savings rate and then how long

it's going to take you to reach financial independence. Uh. The post is called the Shockingly Simple Math behind Early Retirement. Will link to it in the show notes. But the accompanying chart can be really motivational to get you interested in investing more of your money because every percentage point that you ratch it up to your four oh one K contributions has this direct correlation to the amount of

years that you're gonna have full financial freedom. Yeah. And as Mr money Mustache says in the post, cutting spending is even more important than earning more money. Uh. It has that twofold effect of giving you more money to invest now, which means you have less of a lifestyle that you're saving up to fund and so your non working years won't cost you as much if you're able

to keep that lifestyle inflation and check. He specifically links to this kind of chart calculator thing on net worthifi dot com, but we'll make sure to link to that specific calculator in our show notes. So that savings rate is crucial when it comes to the timeline of you

being able to achieve financial independence. And I do think, Matt, that calculator you just mentioned and that post overall is just a huge motivator um and a huge eye opener for a lot of people who are looking to handle their money well and starting down that road to financial independence. It can be helpful to see some of those cold hard numbers that help you realize, wait a second, if I make this one of these one or two small changes, it's going to take years off my need to work

at least. Yeah, cutting a monthly expense, you can see how that changes your retirement from like nineteen years to thirteen years. Like, holy crap, just just that one thing, she just like takes six years of me potentially having to work and an a job that I don't like anymore. Like, like you said, like, that's when your eyes are open and you see that there's a potentially another path for you. Yeah,

it's fun to mess around with. So let's talk about some of the tactics to like savings very it's huge, But we already said that the path of financial independence can look different based on how quickly you want to get there and what you want your life to look like now. But even still, the levers are pretty much the same regardless if you're planning on pursuing lean fire

or fat fire or morbidly obese fire MO fire. I didn't know about until until you mentioned So, Yeah, let's talk about some of the universal tactics for a second, and let's start with income, right, Matt, because that's going to be one of the most important factors. Like, how much money you make is definitely going to be important on your road to achieving financial independence. Yeah, we probably don't talk about this one enough, but we would encourage

folks to find ways to make more money. And here's the thing. We're not talking about working more. Uh, We're not talking about working more crazy unsustainable hours that will leave you burned out. Instead, we want you to pursue a higher income through increasing your skills or getting an advanced degree, starting your own business. Don't forsake the ability to invest in yourself because getting that degree like that's gonna pay dividends for years to come, mentally, emotionally, and

obviously financially as well. Focus on multiple streams of income. This can also be a big advantage as well, if you're in a job or a career that doesn't easily lend itself to making more, even just a modest boost in what you're investing every year can lead to huge returns down the road. Again, Joel, I'm ill love the numbers, so crunching more numbers. And if you're able to invest six thousand dollars, which happens to be the rath ira

a maximum contributions for you know, every year. But if you could do that every year for the next thirty seven years, you're gonna have over one million dollars if that money is invested as it compounds, earning seven percent interest every single year. And that's like I'm not even contributing to my employer plan, and I'm not getting the free match which six always get. Yea, yeah, it's leaving all that aside. Even just a simple rath Ira six

thousand dollars. And again we're not just like getting a D nine four thousand dollars by the time you're thirty. I'm just letting it sit. I'm not saying that this is like super easy to do six thousand dollars, but I'm also pointing out like we want to highlight that this is attainable for a lot of folks out there. Yeah. So one of the taxics is, like you said, to increase your income to invest in yourself that pays big

time dividends. Another tactic that it takes on the path of fire is to, you know, tamp down your expenses, especially on the bigger ticket items like housing and transportation. Most people allocate their take home pay to paying their mortgage or their rent, but you can't really do that if you want to retire early, so you have to consider other routes to your lessen the costs of what

you're paying for housing. So we would suggest things like live in real estate flips, house hacking, or even just renting a cheaper place instead of buying an ice home. Those are all worthwhile considerations if you're looking to achieve financial independence earlier than you previously thought. And that's just such an important area because you can move the needle so aggressively in such a small period of time. Let's say you're in the lease now for a three bedroom

apartment in like a fancy part of town. Maybe you can say, well, we don't need quite need this much space we can instead for this two bedroom apartment that's three miles away and in a good bit cheaper location, we can say four or fifty a month. I mean, that's the kind of thing that instantly gets you to that, you know six, being able to fully invest in your roth IRA every year. That it's those kind of moves that have a huge impact on your trajectory. And it

is important to crush your transportation costs too. We would recommend for folks to own fewer cars or at least cheaper cars. Again, consider biking more. It really isn't rocket science because there's no simpler way of massively boosting or savings rate than to permanently cut expenses in order to

reach financial independence. Essentially, folks that want to reach fire like they're gonna have to think creatively about all the different sorts of other expenses in their lives as well, Like you know, how much you spend on entertainment and eating out, or how much you spend on travel, right, And that's to say that you're not traveling at all, Like many of them still like to travel, but they just choose to travel hack, uh, instead of paying top

dollar you know for their lodging instead, maybe their house sitting, or maybe they're used in their credit card points to to score those airline tickets. Creativity is one of the hallmark traits of someone who is legit serious about reaching financial independence at an early age. You know, we're want to point out that it's not painless. Uh, it's gonna

take a lot of work. But you're gonna have to also find that sweet spot between working really hard and you know, making some sacrifices in life, but at the same time making sure that you're not sacrificing too much, right. You want to make sure that you're setting realistic, moderate goals so that you don't completely burn out and it's not something that you're able to achieve at all. Yeah, man,

I know, I totally agree. I think creativity actually is probably one of the adjectives I would most strongly associate with the Fire Movement. Most of the people I know in there have done really interesting and unique things in order to help put themselves in a strong financial position without having to miss out on some of the things

that they love the most. I think travel, like you said, is one of those areas where a lot of people the Fire Movement travel more than people that aren't in the fire movement that I know, they just found creative ways to do it for less money, and um, yeah,

let's talk about Yeah, the other tactics to take. Investing is another tactic that you obviously need to be doing if you want to achieve fire with all the money that you have at the end of the month by house hacking or not having a car payment, you know, all the other ways that you'll discover that you're wasting money, Well, you're going to want to invest that money like crazy, and you're gonna want to invest in low costs, widely

diversified index funds. You'll first want to max out all the tax advantage retirement accounts that are available to you. This is gonna be a big factor in lowering the amount that you pay in taxes each year. And then the more that you invest in these accounts, the more that you're gonna be super charging the growth of that retirement nest egg. So someone who wants to achieve fire can't be content to save their money in a savings account.

Not that they don't need some of that money hanging around in an emergency fund, right, but if they want to achieve fire. They need to have their money working for them and that only comes through investing, and investing mostly in the stock market, that's right, And that's why we talk so much about investing. Sometimes folks think that we talk about it a little too much, but it's

because it's so important. Yeah, and I don't want to say I said mostly the stock market, but just like we talked about with Rachel on Monday, and just like you and I are also advocates of real estate is one of those other avenues. That's also another one of those tactics. It doesn't just have to be low cost index funds that gets most of the press, but when it comes to is definitely the most passive way, Like I mean that truly is the only passive way to

you know, have a stream of income. But there are other ways that have higher rates of income, but they're gonna take a little bit more work. So it kind of depends which level of work that you're willing to sign up for. And we've talked about real estate quite a bit on the show. You can find other episodes, but that is definitely one of the ways of investing that you can consider if you're looking to achieve financial independence,

and we've encourage you in that direction too. Yeah, and since you've listened this far into the episode, because you're clearly serious about fire, you're likely wondering how you're going to have access to all those funds that are going to be in your retirement accounts, since that's the way that most folks are going to have their retirement savings invested. After all, you know, we're we're talking about retiring early and waiting until you're fifty nine and a half doesn't

really sound lead to me. Uh, And so you might be tempted to think that investing within a brokerage account is the way to go, but that is not the case. By utilizing more complicated strategies like a roth IRA conversion ladder as well as there's this other thing called the step seventy two t you will still still get that tax advantage. I'll love the complexity of the I R S tax, but the I R s yet they're incredibly creative.

Not but by utilizing these strategies, you'll still get that tax advantage and you actually be able to start tapping those accounts well before traditional retirement age. It's a little more complicated, but money that is invested for retirement. You don't necessarily have to wait until you're sixty years old

before you can draw all those funds. Will actually specifically linked to a post by the Mad Scientist, and he outlines how you can do that with a roth Ira conversion ladder or with the seventy two t He even outlines how just even taking that ten percent penalty UH for the early withdrawals on retirement account, how that still will come out ahead um airs of money that you would have invested in a brokerage account. So again, we'll

make sure to link to that in our show notes. Yeah, the Matt Finists is one of the best people in the movement to love that guy, and he's also Yeah, I just put a lot of effort into thinking through some of those strategies and some of the tax roadbumps that you might run into along the way, and how to minimize the impact of taxes on the money that you've worked really hard to save and invest in. So that post in particular is a really helpful one. Yeah,

we'll link to that one. And Matt wrapping this up, I feel like, you know, if any listeners out there have found listening to this episode the concept of fire intriguing. We would say that's great, but know that in order to start pursuing pursuing fire, you're gonna have to shift your relationship with money. I don't think I've ever read a story or heard anybody say that they kind of

stumbled into early financial independence. He usually takes some intentional moves, like we've talked about during this episode in order to get there, and you need to do some thinking, is some deep thinking about whether or not that lifestyle is going to work for you in the long run. Because yeah, some sacrifice now in order to save a decent chunkier pay in order to achieve financial independence is a good thing. But you can also overdo it. You can get burned

out in the process. And I've read, definitely read accounts of that of people saying I'm going home on the fire movement and then they lose steam because it's really hard to keep up a fift savings rates and living you know, massively frugal lifestyle. So yeah, especially if it means you're working too much now in order to avoid work altogether later, that's not a good strategy. Like that's a recipe for burnout. Um, But we are all about increasing your savings rate. We're just not about it to

the point of making yourself miserable. That's not worth it. So it's a better idea to find and pursue work that you love now than to put your nose to the grindstone for a decade or more in order to retire early. Just know that if you're interested in fire, there are a ton of helpful resources out there, and we do think for some folks it's a worthy goal, it's a worthy ambition, and at the same time, there are a lot of routes you can take to get there.

It's not one size fits all, and I think that's encouraging to is that actual independence retirely doesn't mean you have to retire at twenty seven like Rachel Richards did, which is impressive. It can mean retiring at forty seven and that's still is much faster than many of your peers. Or it can mean continuing to work until you're seventy five because you love what you do. But you you chose that route on purpose, and you know on purpose

I think is right. Yeah, absolutely, it's about figuring out what it looks like for you, right, Because we've outlined, you know, like four or five different sort of flavors, but you make your own flavor. You figure it out what it is that you want to pursue, and then you figure out how to get there. I mean, that's what we do with on the you know, on the podcast.

Every single week we talk about things that will get you closer to that goal, and you can choose to implement what we talk about or not, depending on yeah, your own personal goals. But enough of the money talk. Tollis shift gears. Let's get back to the beer. For this episode, you and I both enjoyed a smells like Being Spirit, which is obviously a nod to the Nirvana song. You know that the album cover has got the baby swimming in the pool. That's that's naked or whatever. Well

the can art is a nod to that. It's ut uh So this is a coffee stout and it's got like a little baby made of coffee beans. On the fun of it, it looks like it's swimming kind of floating there in the water. But yeah, this is smells like Bean Spirit. This is a double maple stout. What were your thoughts on this beer? Man? This bee was really good. And I feel like this brewery. I've only had one beer from them before and it was like

a variant of this beer. But I saw this in the store and I was like, that was such a good beer, I'm gonna want to get this other variant of it. So this one had a lot of maple syrup infused into the beer. So yeah, the predominant flavors you were getting were coffee and maple syrup, and those are two great flavors. Man. It made me feel like I was eating like pancakes while my coffee, you know, for breakfast. Um, and that's a good feeling. So I don't know. I thought the way that the depth of

flavors that they infused were really impressive. Maybe maybe a little bit overkill on the maple syrup, but it's too sweet for you. I enjoyed it. You don't like things nearly as sweet as I do. I've got a sugar tooth, for sure. I feel like I could have taken this and just poured it over my pancakes like this beer right here, and I would have been Actually, probably wouldn't have been sweet enough, because maple syrup is quite sweet.

You're a fan of like the real maple syrup, right, yeah, you can't get forget the get the cheap stuff, you forget the Oh yeah, yeah, I'm all about the real stuff. And that stuff is really sweet, but it's also so good. I felt like they definitely use like real maple syrup in this beer. But yeah, the maple syrup coffee vibes that had gone on, it's delicious, even in the middle of summer because we're sitting inside and the a C. This definitely isn't a sitting out on the front porch

out in the heat kind of beer. But I'm glad you and I got to enjoy this one on the episode. And yeah, props to Microphone Brewing, who I have never even heard of before. It looks like they're they're based out of Illinois somewhere, but maybe we'll have more of their beers here soon. If the other beers or anything like this one, I'm sure they'll be delightful. I'd be all about it. All right. Well, that's gonna do it

for this episode. For folks that want the show notes and links to some of the resources that we mentioned, we'll have those up on our website at how to money dot com. That's right, And if you have just stumbled upon this episode, we want to make sure that you don't miss future episodes, so make sure to mash that subscribe button. And if you've been listening for a while, we would greatly appreciate if you head over to Apple Podcasts leave us a solid review over there, or wherever

it is that you listen to podcasts. That helps others out there to find the show. It's going to help others to to start on that path towards financial independence. We want to help folks to achieve that by doing smart things with their money. So John, that's gonna be it, buddy. Until next time, Best Friends Out, Best Friends Out,